No New Arguments In Anti-Jones Act Attack

As a publication specializing in inland waterways, we are familiar with all of the arguments for and against the Jones Act, having made our share of pro arguments ourselves. We are used to the Jones Act being made a scapegoat to distract attention from all kinds of bad policy choices made by states and politicians.

All these patterns hold for an anti-Jones Act piece that recently appeared in The Atlantic magazine. We were briefly intrigued by the click-bait headline, “The Obscure Maritime Law That Ruins Your Commute.” We have heard the Jones Act accused of many things before, but what could the author mean? Would we be treated to a new argument on an old topic?

No such luck. The author is from the Cato Institute, a long-standing and proud Jones Act opponent whose Jones Act attack pieces are often funded by oil companies, which would like to reduce their domestic shipping costs. The “ruins your commute” angle is a claim that congested road traffic along the Northeast corridor would be much reduced if the Jones Act were not there. “The law … forces unwitting northeasterners to be stuck on I-95 surrounded by smog-producing 18-wheelers hauling trailers that could have been traveling between the Ports of New York and Boston on compact, low-emission ships that the Jones Act has made cost-prohibitive.” Unfortunately, the author merely asserts this claim without any evidence to support it.

Worse, he repeats discredited claims that the Jones Act somehow interfered with relief aid to Puerto Rico and Hawaii during recent weather events, and that it is impeding energy supplies to New England. None of these claims is true. New England states’ energy bottlenecks have much more to do with their attempts to choke off pipelines than with the Jones Act.

On disaster relief, the author skirts misinformation when he asserts, “When Hurricanes Maria and Fiona devastated Puerto Rico in 2017 and 2022, respectively, more than 99 percent of the world’s cargo ships couldn’t immediately participate in the relief efforts, because they didn’t comply with the Jones Act’s restrictions.” If “participate” means “carry cargoes between U.S. points,” then maybe. But all those vessels were perfectly free to carry international aid originating outside the U.S. to all those places.

The author argues, “A lack of LNG, propane and oil tankers also forces these areas to import energy from Nigeria, Oman, Spain, (pre-sanctions) Russia and other faraway places, even as U.S. energy is exported from Texas to China and dozens of other countries. Not only is that economically nonsensical, but it also means higher shipping emissions.”

If the Jones Act were to disappear tomorrow, all that might still be true. The types of oil products we refine and sell overseas differ from the types we burn at home. Markets price those differences, and oil companies would take advantage of them no matter which country’s bottoms carried those products. Flags might change; modes would not.

The author complains, “The [Jones Act] encourages American shipyards to turn away from the competitive international market and toward a captive, but much smaller, domestic one.” That “competitive” international market includes shipyards directly subsidized by their governments—which ours are not.

We support competition, innovation and free markets generally—all those things that the Cato Institute supports. And we see plenty of competition and innovation on our inland waterways. But as we have pointed out often, a fully open and non-regulated market has never operated at any time among shipbuilding and maritime nations. Some form of government support and regulation is always present—not surprisingly, given the importance of the sector for national security.

American shipping companies operate under stricter safety and environmental regulations than shipbuilders and operators from many other nations. Allowing foreign-flag vessels to operate between U.S. ports without adhering to those regulations would give them an unfair advantage over U.S. companies. And we haven’t even reached the national-security considerations that are a primary reason for preserving and protecting American shipyards.

The belief that cabotage laws are somehow incompatible with competition and free trade was refuted by Adam Smith himself, the father of  free market theory, who wrote of Great Britain’s cabotage laws, “The act of navigation, therefore, very properly endeavors to give the sailors and shipping of Great Britain the monopoly of the trade of their own country, in some cases, by absolute prohibitions, and in others, by heavy burdens upon the shipping of foreign countries.” He called the cabotage law “perhaps the wisest of all the commercial regulations of England.”